8-KLeadership Changes

APPLIED MATERIALS INC /DE 8-K Report, Executive Changes (Dec 12, 2014)

Filed December 12, 2014For Securities:AMAT

Summary

This Form 8-K filing by Applied Materials, Inc. (AMAT) on December 12, 2014, primarily details amendments to retention bonus and equity award agreements for key executives, including the CEO and CFO. These amendments are directly tied to the pending business combination with Tokyo Electron Limited (TEL). The key changes involve accelerating the vesting of certain pre-September 2013 equity awards for executives who would be considered "disqualified individuals" subject to a 15% excise tax (Section 4985) upon the closing of the merger. Additionally, the payment date for retention bonuses for most officers has been delayed. The company will also cover Section 4985 excise taxes and related taxes for equity awards granted on December 8, 2014, to officers and senior management, contingent on continued employment through the merger's closing. These adjustments are intended to incentivize and retain critical senior management through the complex and lengthy merger process, ensuring continued leadership and focus on business operations and post-merger integration. The HRCC considered these actions necessary to drive growth and positive results towards the successful consummation of the merger.

Key Highlights

  • 1Amendments to executive retention bonus and equity award agreements are effective as of December 8, 2014.
  • 2Vesting of certain equity awards will accelerate for executives subject to excise taxes under Section 4985 of the IRS Code, tied to the closing of the merger with Tokyo Electron Limited (TEL).
  • 3The acceleration applies to equity awards granted prior to September 2013, and a specific award to the CFO in November 2013.
  • 4Retention bonus payment dates for officers (excluding the CEO) are delayed from March 31, 2015, to the earlier of six months post-merger closing/termination or December 11, 2015.
  • 5Applied Materials will cover Section 4985 excise taxes and related taxes for equity awards granted on December 8, 2014, to officers and senior management.
  • 6All amendments and payments are contingent upon the officers' continued employment through the closing of the TEL merger.
  • 7The HRCC approved these measures to incentivize retention and motivate executives during the complex merger process and post-merger integration.

Frequently Asked Questions

The amendments are designed to incentivize and retain key executives, including the CEO and CFO, during the ongoing, complex merger process with Tokyo Electron Limited (TEL). They aim to ensure continued leadership and focus on achieving growth and positive results through the successful closing and integration of the merger.

For certain executives who would be considered "disqualified individuals" and subject to a 15% excise tax under IRS Section 4985 upon the merger's closing, the vesting of equity awards granted before September 2013 (and one specific award to the CFO) will accelerate to three trading days prior to the merger's expected closing date.

Yes, Applied Materials will pay any Section 4985 excise tax and related taxes imposed in connection with equity awards granted on December 8, 2014, to the officers and other senior management members. This tax coverage is subject to their continued employment through the merger's closing.

The payment date for retention bonuses for most officers (excluding the CEO, whose agreement did not include a retention bonus) has been delayed. Instead of March 31, 2015, payment will occur on the earlier of six months after the merger closes or terminates, or December 11, 2015, provided the officer remains employed.